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Purchase Agency Agreement for United Arab Emirates

Purchase Agency Agreement Template for United Arab Emirates

A Purchase Agency Agreement under UAE law establishes a formal relationship between a principal and an agent for purchasing activities within the UAE market. This document outlines the agent's authority to make purchases on behalf of the principal, including specific terms regarding purchasing limits, commission structures, and operational procedures. The agreement must comply with UAE Federal Law No. 18 of 1981 (Commercial Agency Law) and related regulations, addressing key aspects such as territory definition, exclusivity rights, and registration requirements where applicable. It includes comprehensive provisions for reporting mechanisms, payment terms, and compliance with local commercial regulations.

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What is a Purchase Agency Agreement?

The Purchase Agency Agreement is a crucial document for businesses seeking to establish purchasing operations in the UAE through a local agent. This agreement type is commonly used when a company (principal) needs a representative to handle procurement activities in the UAE market but doesn't want to establish a direct presence. The document must align with UAE Federal Law No. 18 of 1981 (Commercial Agency Law) and related regulations, making it essential to include specific provisions about territory, authority limits, and registration requirements. The agreement typically covers detailed terms about purchasing procedures, commission structures, reporting obligations, and compliance requirements. It's particularly important in the UAE context where commercial agency relationships are strictly regulated and certain types of agency arrangements may require registration with the Ministry of Economy.

What sections should be included in a Purchase Agency Agreement?

1. Parties: Identification of the Principal and the Purchase Agent, including full legal names, addresses, and registration details

2. Background: Context of the agreement, including the Principal's business, need for a purchase agent, and general purpose of the arrangement

3. Definitions: Definitions of key terms used throughout the agreement

4. Appointment and Scope: Terms of agent appointment, territory coverage, and whether exclusive or non-exclusive

5. Agent's Authority: Specific powers granted to the agent, including purchasing limits and approval requirements

6. Duties and Responsibilities: Detailed obligations of the Purchase Agent, including reporting, compliance, and operational requirements

7. Principal's Obligations: Responsibilities of the Principal, including providing information, support, and necessary resources

8. Commission and Payment Terms: Structure of agent compensation, payment terms, and calculation methods

9. Term and Termination: Duration of the agreement and circumstances for termination

10. Confidentiality: Protection of confidential information and trade secrets

11. Non-Competition: Restrictions on agent's activities during and after the agreement

12. Governing Law and Jurisdiction: Specification of UAE law application and dispute resolution mechanisms

13. General Provisions: Standard boilerplate clauses including force majeure, notices, and amendments

What sections are optional to include in a Purchase Agency Agreement?

1. Registration Requirements: Required if the agency needs registration with the UAE Ministry of Economy

2. Intellectual Property: Include when the agent will handle branded products or use Principal's IP

3. Insurance: Required when agent handles high-value purchases or specific risk activities

4. Bank Guarantee: Include when financial security is required from the agent

5. Training and Support: Necessary when Principal provides specific training or systems

6. Compliance with Anti-Money Laundering: Required for agencies handling large financial transactions

7. Sub-Agents: Include if agent is permitted to appoint sub-agents

What schedules should be included in a Purchase Agency Agreement?

1. Schedule 1 - Territory Definition: Detailed description of geographical area covered by the agency

2. Schedule 2 - Commission Structure: Detailed breakdown of commission rates and calculation methods

3. Schedule 3 - Products/Services: List of products or services the agent is authorized to purchase

4. Schedule 4 - Purchasing Procedures: Step-by-step procedures for making purchases

5. Schedule 5 - Reporting Requirements: Templates and timing for required reports

6. Appendix A - Power of Attorney: If required, specific powers granted to the agent

7. Appendix B - Bank Guarantee Format: Template for bank guarantee if required

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Publisher

Genie AI

Document Type

Agency Agreement

Cost

Free to use

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